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Exhibit 10.1
GIGA-TRONICS INCORPORATED
RESTATED 1990 STOCK OPTION PLAN
AS RESTATED JULY 23, 1992 AND AMENDED MAY 17, 1994
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ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. This Restated 1990 Stock Option Plan (the "Plan"), as
restated effective July 23, 1992 and amended May 17, 1994, is intended to
promote the interests of Giga-tronics Incorporated, a California corporation
(the "Company"), by providing a method whereby the Company's employees are to be
offered equity incentives intended to encourage such individuals to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Company and to continue to render services to the Company or its parent or
subsidiary corporations.
B. For purposes of the Plan, the following definitions shall be
in effect:
BOARD: the Company's Board of Directors.
COMMON STOCK: The Common Stock issuable under the Plan shall
be shares of the Company's common stock, no par value.
DISABILITY: The permanent incapacity of an individual, by
reason of physical or mental illness, to perform his/her usual duties
for the Company. Disability shall be determined by the Committee after
consideration of such medical evidence as it may require.
EMPLOYEE: An individual shall be considered to be an
Employee for so long as such individual remains in the employ
of the Company or one or more of its parent or subsidiary
corporations.
FAIR MARKET VALUE: The Fair Market Value per share of Common
Stock on any relevant date under the Plan shall be the mean between the
highest bid and lowest asked prices (or, if such information is
available, the closing selling price) per share of Common Stock on such
date in the over-the-counter market, as such prices are reported by the
National Association of Securities Dealers on the Nasdaq National
Market (or any successor system). Should the Common Stock become traded
on a national securities exchange, then the Fair Market Value per share
shall be the closing selling price on such exchange on the date in
question, as such price is quoted on the composite tape of transactions
on such exchange. If there is no reported sale of Common Stock on the
over-the-
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counter market (or national securities exchange) on the date in
question, then the Fair Market Value shall be the mean between the
highest bid and lowest asked prices (or closing selling price) on the
last preceding date for which such quotations exist.
PARENT: A corporation shall be deemed to be a parent of the
Company if it is a corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, provided each such
corporation in the unbroken chain (other than the Company) owns, at the
time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
SECTION 16(B) INSIDER: An individual shall be considered to
be a Section 16(b) Insider on any relevant date under the Plan if such
individual is at the time subject to the short-swing profit
restrictions of Section 16(b) of the Securities Exchange Act of 1934 by
reason of his or her affiliation with the Company.
SERVICE: An individual shall be deemed to be in the Service
of the Company for so long as such individual (i) renders service on a
periodic basis to the Company or one or more of its parent or
subsidiary corporations as an Employee or (ii) serves as a non-employee
member of the Company's Board of the Directors.
SUBSIDIARY: A corporation shall be deemed to be a subsidiary
of the Company if it is one of the corporations (other than the
Company) in an unbroken chain of corporations beginning with the
Company, provided each such corporation (other than the last
corporation in the unbroken chain) owns, at the time of determination,
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain. For purposes of all non-statutory option grants under
Article Two and all Corporate Transaction provisions of the Plan, the
term "subsidiary" shall also include any partnership, joint venture or
other business entity of which the Company owns, directly or indirectly
through another subsidiary corporation, more than a fifty percent (50%)
interest in voting power, capital or profits.
C. Stock option grants made to any individual under the Plan
shall not in any way affect, limit or restrict such individual's eligibility to
participate in any other stock plan or
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other compensation or benefit plan, arrangement or practice now or hereafter
maintained by the Company or any parent or subsidiary corporation.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by a committee (the
"Committee") of two (2) or more Board members appointed by the Board. A Board
member shall be eligible to serve on such Committee only if such individual
shall not have received, at any time during the twelve (12)-month period
preceding the date such individual is to commence Committee service, any awards
or grants under this Plan (other than an automatic option grant under the
provisions of this Plan in effect prior to the May 1994 amendment) or under any
other stock option, stock appreciation, stock bonus or other stock plan of the
Company or its parent or subsidiary corporations. The Board shall have the
authority to fill any and all vacancies on the Committee, however caused.
B. Subject to the express provisions of the Plan, the Committee
shall have plenary authority:
(i) to make discretionary option grants to Employees under
the Discretionary Option Grant Program set forth in Article Two;
(ii) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations
deemed necessary or advisable in administering the Plan; and
(iii) to change the terms and conditions of any outstanding
option grant under the Discretionary Option Grant Program, provided such action
does not, without the consent of the holder, adversely affect the rights and
obligations such individual may have under the Plan or the outstanding grant.
C. Determinations of the Committee on all matters relating to the
Plan and any option grants or stock issuances made hereunder shall be final,
binding and conclusive on all persons having any interest in the Plan or any
options granted or shares issued under the Plan.
III. PLAN STRUCTURE AND ELIGIBILITY
A. The Plan as amended May 1994 shall consist only of the
Discretionary Option Grant Program set forth in Article Two. The terms and
provisions of Articles One and Five of the Plan shall also be applicable to such
program.
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B. The individuals eligible to participate in the Discretionary
Option Grant Program ("Optionees") shall be limited to Employees (including
officers and directors) of the Company or its parent or subsidiary corporations.
Non-employee members of the Board shall not be eligible to participate in the
Discretionary Option Grant Program.
C. Members of the Committee shall not, during their period of
Committee service, participate in the Discretionary Option Grant Program of
Article II of this Plan or in any other stock option, stock bonus, stock
purchase or stock plan of the Company or its parent or subsidiary corporations.
IV. STOCK SUBJECT TO THE PLAN
A. The Common Stock issuable under the Plan shall be made
available either from authorized but unissued shares of Common Stock or from
shares of Common Stock reacquired by the Company on the open market. The
aggregate number of shares of Common Stock issuable over the term of this Plan
shall not exceed 400,000 shares (subject to adjustment from time to time in
accordance with paragraph C. below).
B. Should an option expire or terminate for any reason prior to
exercise or surrender in full (including options cancelled in accordance with
the cancellation-regrant provisions of Article Two below), the shares subject to
the portion of the option not so exercised or surrendered shall be available for
subsequent option grants under the Plan. Shares subject to any stock
appreciation rights exercised in accordance with the Stock Appreciation Right
provisions of Articles Two and all share issuances under the Plan shall reduce
on a share-for-share basis the number of shares of Common Stock available for
subsequent option grants under this Plan. If the exercise price of an
outstanding option under the Plan is paid with shares of Common Stock or if
shares of Common Stock otherwise issuable under the Plan are withheld by the
Company in satisfaction of the withholding taxes incurred in connection with the
exercise of an outstanding option under the Plan, then the number of shares of
Common Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised, and not by the net number of
shares of Common Stock actually issued.
C. In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
shall be made to (i)
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the maximum number and/or class of shares issuable under this Plan, to reflect
the effect of such change upon the Company's capital structure, (ii) the class
and/or maximum number of securities for which stock options and separately
exercisable stock appreciation rights may be granted to any one participant in
the aggregate after April 30, 1994 and (iii) the number and/or class of shares
and the exercise price per share of the stock subject to each outstanding option
in order to preclude the dilution or enlargement of benefits thereunder. The
adjustments determined by the Committee shall be final, binding and conclusive.
D. In the event that (i) the Company is the surviving entity in
any Corporate Transaction which does not result in the termination of
outstanding options pursuant to the Corporate Transaction provisions of the Plan
or (ii) the outstanding options under the Plan are to be assumed in connection
with such Corporate Transaction, then each such continuing or assumed option
shall, immediately after such Corporate Transaction, be appropriately adjusted
Ito apply and pertain to the number and class of securities which would be
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the exercise price payable per share, provided the aggregate
option price shall remain the same, and to the number and class of securities
which remain issuable under this Plan.
E. In no event may any one individual participating in the Plan
be granted stock options and separately exercisable stock appreciation rights
for more than 200,000 shares in the aggregate over the remaining term of the
Plan, subject to adjustment from time to time in accordance with paragraph C.
above. For purposes of such limitation, no stock options or stock appreciation
rights granted prior to May 1, 1994 shall be taken into account.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
A. The Committee shall have plenary authority (subject to the
express provisions of the Plan) to determine which Employees are to be granted
options under this Discretionary Option Grant Program, the number of shares to
be covered by each such option, the status of the granted option as either an
incentive stock option which meets the requirements of Section 422 of the
Internal Revenue Code ("Incentive Option") or a non-statutory option not
intended to meet such requirements, the time or times at which such option is to
become exercisable and the maximum term for which the option is to remain
outstanding.
B. The granted options shall be evidenced by instruments in such
form as the Committee shall from time to time approve; provided, however, that
each such instrument shall comply with and incorporate the terms and conditions
specified below.
1. Option Price.
a. The option price per share shall be fixed by the Committee,
but in no event shall the option price per share be less than eighty percent
(80%) of the Fair Market Value per share of Common Stock on the date of the
option grant.
b. The option price shall become immediately due upon exercise
of the option and shall, subject to the loan provisions of this Article Two, be
payable in one of the alternative forms specified below:
(A) full payment in cash or check made payable to the
Company's order; or
(B) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
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(C) full payment in a combination of shares of Common Stock
held by the Optionee for the requisite period necessary to avoid a
charge to the Company's reported earnings and valued at Fair Market
Value on the Exercise Date and cash or check made payable to the
Company's order; or
(D) full payment through a sale and remittance procedure
pursuant to which the Optionee (I) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Company by reason of such purchase and (II) shall
concurrently provide written directives to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
c. For purposes of subparagraph b. above, the Exercise Date
shall be the date on which written notice of the option exercise is delivered to
the Company. Except to the extent the sale and remittance procedure is utilized
in connection with the option exercise, payment of the option price for the
purchased shares must accompany the exercise notice.
2. Term and Exercise of Options.
a. Each option granted under this Discretionary Option Grant
Program shall be exercisable in one or more installments over the Optionee's
period of Service as shall be determined by the Committee and shall be set forth
in the instrument evidencing such option; provided, however, that (i) no such
option shall become exercisable in whole or in part within the first six (6)
months after the grant date, except as otherwise provided in Section III of this
Article Two and (ii) no such option shall have a term in excess of ten (10)
years from the grant date.
b. During the lifetime of the optionee, the option, together
with any stock appreciation rights pertaining to such option, shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee other than a transfer of the option effected by will or by the laws
of descent and distribution following the optionee's death.
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3. Termination of Service.
a. Should an Optionee cease to continue in Service for any
reason (other than termination set forth in subparagraph c. below) while the
holder of one or more outstanding options under this Discretionary Option Grant
Program, then such options shall not be exercisable at any time after the
earlier of (i) the specified expiration date of the option term or (ii) the
expiration of the limited period of time (not to exceed twelve (12) months after
the Optionee's cessation of Service) specified by the Committee in the option
agreement. Each such option shall, during the applicable period following
cessation of Service, be exercisable only to the extent of the number of shares
(if any) in which the Optionee is vested on the date of such cessation of
Service.
b. Any option granted to an Optionee under this Discretionary
Option Grant Program and outstanding in whole or in part on the date of the
Optionee's death may be subsequently exercised, but only to the extent of the
number of shares (if any) in which the Optionee is vested on the date of his/her
cessation of Service (less any shares subsequently purchased by the optionee
prior to death), by the personal representative of the Optionee's estate or by
the person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution. Any
such exercise must occur prior to the earlier of (i) the expiration date of the
option term or (ii) the expiration of the limited period of time (not to exceed
twelve (12) months following the Optionee's cessation of Service) specified by
the Committee in the option agreement.
c. If the Optionee's Service is terminated for any of the
following reasons, then all outstanding options granted the Optionee under this
Discretionary Option Grant Program shall immediately terminate and cease to be
exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct or continuing gross
neglect of duties which materially and adversely affects the business
and operations of the Company or any parent or subsidiary corporation
employing Optionee;
(2) Optionee's unauthorized use or disclosure (or attempt
thereat) of confidential information or trade secrets of the Company or
its parent or subsidiary corporations; or
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(3) Optionee's commission of an act involving embezzlement,
theft, fraud, falsification of records, destruction of property or
commission of a crime or other offense involving money or other
property of the Company or any parent or subsidiary corporation
employing Optionee.
The reasons for termination of Optionee's Service set forth
in this subparagraph c. are not intended to be, and are not inclusive of, all
acts or omissions which the Company may deem to constitute misconduct or other
grounds for terminating the Optionee's (or any other individual's) Service.
d. The Committee shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to establish as a provision applicable to the exercise of one or
more options granted under this Discretionary Option Grant Program that during
the limited period of exercisability following cessation of Service, the option
may be exercised not only with respect to the number of shares in which the
Optionee is vested at the time of such cessation of Service but also with
respect to one or more subsequent installments of purchasable shares in which
the Optionee would otherwise have vested had the Optionee continued in Service.
In addition, the Committee shall have similar discretion to extend the period of
time during which the option is to remain exercisable following the optionee's
cessation of Service, but in no event shall such period extend beyond the
specified expiration date of the option term.
4. Shareholder Rights. An option holder shall have none of the
rights of a shareholder with respect to any shares covered by the option until
such individual shall have exercised the option, paid the option price and
satisfied all other conditions precedent to the issuance of certificates for the
purchased shares.
II. STOCK APPRECIATION RIGHTS
A. Each Section 16(b) Insider shall have a limited stock
appreciation right ("Limited Right") in tandem with each option grant (whether
an Incentive Option or a non-statutory option) made to such individual under
this Discretionary Option Grant Program. The Limited Right shall entitle the
Section 16(b) Insider to surrender the underlying option in connection with a
Change in Control (as defined below) for an appreciation distribution from the
Company in an amount equal to the excess of (I) the Change in Control Price (as
defined below) of the number of shares in which the Section 16(b) Insider is at
the time vested under the surrendered option over (II) the aggregate option
price payable for such vested shares.
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B. The terms and conditions applicable to each such Limited
Right shall be as follows:
1. The option may only be surrendered during the thirty
(30)-day period following the Change in Control. However, the Section
16(b) Insider may not surrender any option which (I) has not been
outstanding for at least six (6) months prior to the surrender date and
(II) is not at the time exercisable for any vested shares.
2. For purposes of calculating the appreciation
distribution payable by the Company on each surrendered option, the
Change in Control Price per share of the vested Common Stock subject to
the surrendered option shall be deemed to be equal to the greater of
(a) the Fair Market Value per share on the option surrender date or (b)
the highest reported price per share paid in effecting the Change in
Control. However, if the option is an Incentive Option, then the Change
in Control Price of the vested shares subject to the surrendered option
shall not exceed the value per share determined under clause (a) above.
3. The appreciation distribution shall be made entirely in
cash, and neither the approval of the Committee nor the consent of the
Board shall be required in connection with such surrender and
distribution. The shares of Common Stock subject to each surrendered
option shall not be available for subsequent issuance under this Plan.
4. A Change in Control shall be deemed to occur in the
event any of the following transactions is effected:
(i) the acquisition by a person or group of related
persons, other than the Company or any person controlling,
controlled by or under common control with the Company, of
beneficial ownership (as determined pursuant to the provisions
of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the
Company's then outstanding securities pursuant to a
transaction or series of related transactions which the Board
does not approve; or
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(ii) the first date within any period of twelve (12)
consecutive months or less on which there is effected any
change in the composition of the Board such that the majority
of the Board (determined by rounding up to the next whole
number) ceases to be comprised of individuals who either (A)
have been members of the Board continuously since the
beginning of such period or (B) have been elected or nominated
for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were
still in office at the time such election or nomination was
approved by the Board.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any of the following transactions (a
"Corporate Transaction") to which the Company is a party and for which the
approval of the Company's shareholders is obtained:
(i) a merger or acquisition in which the Company is not
the surviving entity, except for a transaction the principal purpose
of which is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company to any entity other than
a parent or subsidiary of the Company, or
(iii) any reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to holders different
from those who held the stock immediately prior to such merger,
the exercisability of each option outstanding under this
Discretionary Option Grant Program (whether or not such option has been
outstanding for a period of six (6) months) shall be automatically accelerated
so that each such option shall, immediately prior to the specified effective
date for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock purchasable under such option and may be
exercised for all or any portion of such shares. However, the instrument
evidencing an option grant under this Discretionary Option Grant Program may
provide that such option shall not be so
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accelerated if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof, or (ii) such
option is to be replaced by a comparable cash incentive program of the successor
corporation based on the value of the option at the time of the Corporate
Transaction, or (iii) the acceleration of such option is subject to other
applicable limitations imposed by the Committee at the time of grant. The
determination of comparability under clause (i) or (ii) above shall be made by
the Committee, and its determination shall be final, binding and conclusive. The
Committee shall have the discretion, exercisable either in advance of any
actually-anticipated Corporate Transaction or at the time of an actual Corporate
Transaction, to provide (upon such terms and conditions as it may deem
appropriate) for either the automatic acceleration of one or more assumed or
replaced options which are not otherwise to be accelerated in connection with
the Corporate Transaction or the automatic vesting of any cash incentive
programs implemented in replacement of such options, in the event the Optionee's
employment should subsequently terminate within a designated period following
the effective date of such Corporate Transaction.
B. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Discretionary Option Grant
Program shall, to the extent not previously exercised or assumed by the
successor corporation or its parent company, terminate and cease to be
outstanding.
C. Upon the occurrence of any of the following transactions (a
"Change in Control"):
(i) the acquisition by a person or group of related persons,
other than the Company or any person controlling, controlled by or
under common control with the Company, of beneficial ownership (as
determined pursuant to the provisions of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of securities of the
Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities pursuant to a
transaction or series of related transactions which the Board does not
approve; or
(ii) the first date within any period of twelve (12)
consecutive months or less on which there is effected any change in the
composition of the Board such that the majority of the Board
(determined by rounding up
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to the next whole number) ceases to be comprised of individuals who
either (A) have been members of the Board continuously since the
beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board;
the exercisability of each option outstanding under this
Discretionary Option Grant Program (whether or not such option has been
outstanding for a period of six (6) months) shall be automatically accelerated
so that each such option shall become exercisable, immediately prior to such
Change in Control, for the full number of shares purchasable under such option
and may be exercised for all or any portion of such shares at any time
thereafter until the expiration or sooner termination of the option term.
However, an outstanding option under this Discretionary Option Grant Program
shall not be so accelerated if and to the extent one or more limitations imposed
by the Committee at the time of grant preclude such acceleration upon a Change
in Control. The Committee shall have the discretion, exercisable either in
advance of any actually-anticipated Change in Control or at the time of an
actual Change in Control, to provide (upon such terms and conditions as it may
deem appropriate) for the automatic acceleration of one or more outstanding
options which are not otherwise to be accelerated upon a Change in Control, in
the event the Optionee's employment should subsequently terminate within a
designated period following the effective date of such Change in Control.
D. In the event a particular transaction qualifies as both a
Corporate Transaction and a Change in Control, the provisions of Section III.A
shall be controlling.
E. The grant of options under this Discretionary Option Grant
Program shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. INCENTIVE OPTIONS
A. The terms and conditions specified below shall be applicable
to all Incentive Options granted under this Discretionary Option Grant Program.
Options which are specifically designated as "non-statutory" options when issued
under this Discretionary Option Grant Program shall not be subject to such terms
and conditions.
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1. Option Price. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value per share of Common
Stock on the grant date.
2. 10% Stockholder. If any individual to whom an Incentive
Option is to be granted pursuant to the provisions of this
Discretionary Option Grant Program is on the grant date the owner of
stock (as determined under Section 425(d) of the Internal Revenue Code)
possessing 10% or more of the total combined voting power of all
classes of stock of the Company or any one of its parent or subsidiary
corporations (such person to be herein referred to as a 10%
Stockholder), then (i) the option price per share shall not be less
than one hundred and ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date and (ii) the maximum term of
the option shall not exceed five (5) years from the grant date.
3. Dollar Limitation. The aggregate fair market value
(determined on the basis of the Fair Market Value in effect on the
respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other
option plan of the Company or its parent or subsidiary corporations)
may for the first time become exercisable as incentive stock options
under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability thereof as incentive stock options
under the Federal tax laws shall be applied on the basis of the order
in which such options are granted.
B. Except as modified by the preceding provisions of this
Incentive Options section, all the provisions of this Discretionary Option Grant
Program shall be applicable to the Incentive Options granted hereunder.
V. CANCELLATION AND RE-GRANT OF OPTIONS
A. The Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under this Discretionary Option
Grant Program and to grant in
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substitution therefor new options under this Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than (i) eighty percent (80%) of the Fair Market Value per share of Common Stock
on the new grant date, or (ii) one hundred percent (100%) of such Fair Market
Value if the new option is to be an Incentive Option, or (iii) one hundred and
ten percent (110%) of such Fair Market Value if the new option is to be an
Incentive Option subject to the provisions of Section IV.A.2.
VI. LOANS OR GUARANTEE OF LOANS
A. The Committee may assist any Employee (including any officer
or director) in the exercise of one or more outstanding options under this
Discretionary Option Grant Program by (a) authorizing the extension of a loan to
such Employee from the Company, (b) permitting the Employee to pay the option
price for the purchased Common Stock in installments over a period of years or
(c) authorizing a guarantee by the Company of a third-party loan to the
Employee. The terms of any loan, installment method of payment or guarantee
(including the interest rate and terms of repayment) shall be established by the
Committee in its sole discretion. Loans, installment payments and guarantees may
be granted without security or collateral, but the maximum credit available to
the optionee shall not exceed the sum of (i) the aggregate option price of the
purchased shares plus (ii) any Federal and State income and employment tax
liability incurred by the Employee in connection with the exercise of the
option.
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ARTICLE THREE
MISCELLANEOUS
I. TAX WITHHOLDING
A. The Company's obligation to deliver shares or cash upon the
exercise or surrender of stock options or stock appreciation rights granted
under the Discretionary Option Grant Program shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements.
B. The Committee may, in its discretion and upon such terms and
conditions as it may deem appropriate (including the applicable safe-harbor
provisions of SEC Rule 16b-3 or any successor rule or regulation) provide any or
all holders of outstanding option grants under the Discretionary Option Grant
Program with the election to have the Company withhold, from the shares of
Common Stock purchased or issued pursuant to such options, a portion of those
shares with an aggregate Fair Market Value equal to the designated percentage
(any multiple of 5% specified by the Optionee) of the Federal and State income
taxes ("Taxes") incurred in connection with their acquisition. In lieu of such
direct withholding, one or more Optionees may also be granted the right to
deliver shares of Common Stock to the Company in satisfaction of such Taxes. The
withheld or delivered shares shall be valued at the Fair Market Value on the
applicable determination date for such Taxes or such other date required by the
applicable safe-harbor provisions of SEC Rule 16b-3.
II. AMENDMENT OF THE PLAN
A. Except to the extent otherwise provided in this Article
Three, the Board shall have the complete and exclusive authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification shall, without the consent of the holders, adversely affect rights
and obligations with respect to any stock options or stock appreciation rights
at the time outstanding under the Plan.
B. The Board shall not, without the approval of the Company's
shareholders, (i) increase the maximum number of shares issuable under the Plan
or the number of shares for which any one individual participating in the Plan
may be granted stock options and separately exercisable stock appreciation
rights in the aggregate after April 30, 1994, except for permissible adjustments
in the event of a change in the corporate structure of the Company, (ii)
materially increase the benefits accruing to participants
16.
18
under the Plan or (iii) materially modify the eligibility requirements for
participation in the Plan.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was initially adopted by the Board on June 26, 1990
and approved by the Company's shareholders at the 1990 Annual Meeting. The
Committee may grant stock options under the Discretionary Option Grant Program
at any time prior to the date fixed herein for termination of the Plan.
B. The Board amended and restated the Plan effective May 8, 1991
to implement the automatic option grant program for certain non-employee Board
members and to conform the provisions of the Plan to recent changes in the SEC
rules under Section 16 of the Securities Exchange Act of 1934 applicable to
transactions effected under the Plan by Section 16(b) Insiders. The May 1991
restatement was approved by the Company's shareholders at the 1991 Annual
Meeting. The May 1991 restatement shall apply only to options granted under the
Plan from and after the May 8, 1991 effective date. Each option (together with
any related stock appreciation right) issued and outstanding under the Plan
immediately prior to such effective date shall continue to be governed by the
terms and conditions of the Plan (and the option agreement evidencing such
option and stock appreciation right) as in effect on the date such option was
previously granted, and nothing in the May 1991 restatement shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to the acquisition of shares of Common Stock thereunder or
the exercise of their outstanding stock appreciation rights.
C. On July 23, 1992, the Board adopted a restatement of the Plan
to bring the Plan into compliance with recent SEC interpretive rulings under
Rule 16b-3, as amended May 1, 1991, under the Securities Exchange Act of 1934.
The July 1992 restatement shall apply only to options granted under the Plan
from and after the July 23, 1992 effective date. Each option (together with any
related stock appreciation right) issued and outstanding under the Plan
immediately prior to such effective date shall continue to be governed by the
terms and conditions of the Plan (and the option agreement evidencing such
option and stock appreciation right) as in effect on the date such option was
previously granted, and nothing in the July 1992 restatement shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to the acquisition of shares of Common Stock thereunder or
the exercise of their outstanding stock appreciation rights.
17.
19
D. The sale and remittance procedure for the exercise of
outstanding options shall be available for all options granted under the Plan
after April 30, 1991 and for all non-statutory options outstanding under the
Plan on such date. The Committee may also allow such procedure to be utilized in
connection with one or more disqualifying dispositions of Incentive Option
shares effected after such date.
E. On May 17, 1994, the Board amended the Plan to increase the
number of shares of Common Stock issuable over the term of the Plan by an
additional 100,000 shares, and such amendment shall be submitted for shareholder
approval at the 1994 Annual Meeting. The 100,000-share increase became effective
immediately upon authorization by the Board, but no option granted on the basis
of such increase shall be exercisable unless and until the increase shall have
been approved by the Company's shareholders. If such shareholder approval is not
obtained at the 1994 Annual Meeting, then any options previously granted on the
basis of the 100,000-share increase shall terminate and no further options based
on such increase shall be granted. Those options granted under the Plan which
are not based on such increase shall remain outstanding in accordance with the
terms and conditions of the respective instruments evidencing such options,
whether or not the requisite shareholder approval is obtained. Subject to the
foregoing limitations, the Plan Administrator may grant options under the Plan
at any time before the date fixed herein for termination of the Plan. In
addition, the May 1994 amendment eliminated the automatic option grant program
previously in effect under the Plan for non-employee Board members, retroactive
to January 1, 1993.
F. The Plan shall in all events terminate upon the earlier of
(i) the tenth (10th) anniversary of the date of its adoption by the Board or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise or surrender of stock
options and/or stock appreciation rights under the Plan. If the date of
termination is determined under clause (i) above, then any stock options and
stock appreciation rights at the time outstanding under the Plan shall continue
to have force and effect in accordance with the provisions of the instruments
evidencing such grants.
G. Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance under
the Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one year thereafter such amendment is approved by the
Company's shareholders and (ii) each option granted is not to
18.
20
become exercisable, in whole or in part, at any time prior to the obtaining of
such shareholder approval.
IV. MISCELLANEOUS PROVISIONS
A. Any cash proceeds received by the Company from the issuance
of shares hereunder shall be used for general corporate purposes.
B. The implementation of the Plan, the granting of any stock
option, and the issuance of Common Stock hereunder, shall be subject to the
Company's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, and the stock options granted
under it and the Common Stock issued pursuant to it.
C. Neither the action of the Company in establishing the Plan,
nor any action taken by the Board or the Committee hereunder, nor any provision
of the Plan itself shall be construed so as to grant any individual the right to
remain in the employ or service of the Company or any of its parent or
subsidiary corporations for any period of specific duration, and the Company (or
any parent or subsidiary retaining the services of such individual) may
terminate such individual's employment or service at any time and for any
reason, with or without cause.
D. Nothing contained in the Plan shall be construed to limit the
authority of the Company to exercise its corporate rights and powers, including
(without limitation) the right of the Company (a) to grant options for proper
corporate purposes otherwise than under this Plan to any Employee or other
person, firm or company or association or (b) to grant options to, or assume the
option of, any person in connection with the acquisition (by purchase, lease,
merger, consolidation or otherwise) of the business and assets (in whole or in
part) of any person, firm, company or association.
19.
21
EXHIBIT A to EXHIBIT 10.1
EXHIBIT A
Giga-Tronics Incorporated
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors of the Company (the "Board")
has adopted the Company's Restated 1990 Stock Option Plan (the "Plan") for the
purpose of attracting and retaining the services of key employees (including
officers and directors) who contribute to the financial success of the Company
or its parent or subsidiary corporations.
B. Optionee is an individual who is to render valuable
services to the Company or its parent or subsidiary corporations, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the Company's grant of a stock option to Optionee.
C. For purposes of this Agreement, the following
definitions shall be in effect:
Employee: Optionee shall be considered to be an
Employee for so long as such individual remains in the employ of the
Company or one or more of its Parent or Subsidiary corporations.
Fair Market Value: The Fair Market Value per share of
Common Stock on any relevant date under the Plan shall be the mean
between the highest bid and lowest asked prices (or, if such
information is available, the closing selling price) per share of
Common Stock on such date in the over-the-counter market, as such
prices are reported by the National Association of Securities Dealers
through the NASDAQ system (or any successor system). Should the Common
Stock become traded on a national securities exchange, then the Fair
Market Value per share shall be the closing selling price on such
exchange on the date in question, as such price is quoted on the
composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on the over-the-counter market (or
national securities exchange) on the date in question, then the Fair
Market Value shall be the mean between the highest bid and lowest asked
prices (or closing selling price) on the last preceding date for which
such quotations exist.
1.
22
Parent: A corporation shall be deemed to be a Parent
of the Company if it is a corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each
such corporation in the unbroken chain (other than the Company) owns,
at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
Service: Optionee shall be deemed to be in the
Service of the Company for so long as such individual (i) renders
services on a periodic basis to the Company or one or more of its
Parent or Subsidiary corporations as an Employee or (ii) serves as a
non-employee member of the Board.
Subsidiary: A corporation shall be deemed to be a
Subsidiary of the Company if it is a member of an unbroken chain of
corporations beginning with the Company provided each corporation in
such chain (other than the last corporation) owns, at the time of
determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain. In the event this option is a non-statutory option as
specified in the Grant Notice, the term "Subsidiary" shall also include
any partnership, joint venture or other business entity of which the
Company owns, directly or indirectly through another subsidiary
corporation, more than a fifty percent (50%) interest in voting power,
capital or profits.
TERMS
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, the Company hereby grants to Optionee,
as of the grant date (the "Grant Date") specified in the accompanying Notice of
Grant of Stock Option (the "Grant Notice"), a stock option to purchase up to
that number of shares of the Company's Common Stock (the "Optioned Shares") as
is specified in the Grant Notice. The Optioned Shares shall be purchasable from
time to time during the option term at the option price per share (the "Option
Price") specified in the Grant Notice.
2. Option Term. This option shall have a maximum term of
five (5) years measured from the Grant Date and shall accordingly expire at the
close of business on the expiration date (the "Expiration Date") specified in
the Grant Notice, unless sooner terminated in accordance with Paragraph 5 or 7A
of this Agreement.
2.
23
3. Transferability. This option shall not be
transferable or assignable by Optionee other than by will or by the laws of
descent and distribution. Accordingly, this option may be exercised, during
Optionee's lifetime, only by Optionee.
4. Exercisability. This option shall become exercisable
for the Optioned Shares in one or more installments as is specified in the Grant
Notice. As the option becomes exercisable in one or more installments, it shall
remain so exercisable until the Expiration Date or sooner termination of the
option term under Paragraph 5 or Paragraph 7A of this Agreement.
5. Termination of Service. In connection with the
Optionee's cessation of Service, the option term specified in Paragraph 2 shall
terminate (and this option shall cease to be exercisable) prior to the
ExpiratiOn Date in accordance with the following provisions:
(i) Except as otherwise provided in
subparagraphs (ii) and (iii) below, should the Optionee's Service with the
Company terminate at any time during the option term, then the period for
exercising this option shall be reduced to a two (2) month period commencing
with the date of such termination of Service but in no event shall this option
be exercisable at any time after the Expiration Date. During such limited period
of exercisability, this option may not be exercised for more the number of
Optioned Shares (if any) for which the option is exercisable on the date of
Optionee's termination of Service.(1) Upon the expiration of such two (2) month
period or (if earlier) upon the Expiration Date, the option shall terminate and
cease to be outstanding.
(ii) Should Optionee die while this option is
outstanding, then the personal representative of the Optionee's estate (or the
person or persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution) shall have the
right to exercise this option for any or all of the Optioned Shares for which
this option is exercisable on the date of the Optionee's cessation of Service.
Such right shall lapse, and this option shall cease to be exercisable, upon the
earlier of (A) the
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(1) In the event this option is an incentive stock option as specified
in the Grant Notice, the exercise of this option more than three (3) months
after the date of Optionee's cessation of Employee status for any reason (other
than death or permanent disability) will disqualify this option for favorable
tax treatment as further specified in Paragraph 17A.
3.
24
expiration of the six (6) month period measured from the date of Optionee's
cessation of Service or (B) the Expiration Date.
(iii) Should the Optionee's Service be terminated
for any of the following reasons, then this option shall terminate and cease to
be exercisable immediately upon such termination of Service:
(1) Optionee's intentional misconduct
or continuing gross neglect of duties which materially and adversely affects the
business and operations of the Company or any Parent or Subsidiary corporation
employing Optionee;
(2) Optionee's unauthorized use or
disclosure (or attempt thereat) of confidential information or trade secrets of
the Company or its Parent or subsidiary corporations;
(3) Optionee's commission of an act
involving embezzlement, theft, fraud, falsification of records, destruction of
property or commission of a crime or other offense involving money or other
property of the Company or any Parent or subsidiary corporation employing
Optionee.
The reasons for termination of Optionee'S Service set forth in
this subparagraph (iii) are not intended to be, and are not inclusive of, all
acts or omissions which the Company may deem to constitute misconduct or other
grounds for terminating the Optionee's (or any other individual's) Service.
6. Adjustment in Optioned Shares.
A. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock dividend, stock split,
combination of shares, exchange of shares, or other change affecting the
outstanding Common stock as a class without receipt of consideration, the Plan
Administrator shall make appropriate adjustments to (a) the class and/or number
of securities subject to this option and (b) the Option Price payable per share
in order to reflect such change and thereby preclude a dilution or enlargement
of benefits hereunder. The adjustments so determined by the Plan Administrator
shall be final, binding and conclusive.
B. In the event that (i) the Company is the surviving
entity in any Corporate Transaction (within the meaning of paragraph 7A) which
does not result in the termination of this option pursuant to the provisions of
Paragraph 7 or (ii) this option is to be assumed in connection with such
Corporate Transaction, then this option shall, immediately after such Corporate
Transaction, be appropriately adjusted to apply and
4.
25
pertain to the number and class of securities which would be issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to this option immediately prior
to such Corporate Transaction. Appropriate adjustments shall also be made to the
Option Price payable per share, provided the aggregate Option Price shall remain
the same.
7. Corporate Transaction/Change in Control.
A. Upon the occurrence of one or more of the following
transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the Company
is not the surviving entity, except for a transaction the principal purpose of
which is to change the state of the Company's incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company to any entity other than a
Parent or Subsidiary of the Company, or,
(iii) any reverse merger in which the Company is
the surviving entity but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those who held
the stock immediately prior to such merger,
the exercisability of this option shall, to the extent it is not otherwise at
the time fully exercisable, be automatically accelerated so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Optioned Shares and may be
exercised for all or any portion of such shares. No such acceleration of this
option, however, shall occur if and to the extent (i) the option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof or (ii) the option is to be replaced by a comparable cash incentive
program of the successor corporation based on the option spread (the excess of
the Fair Market Value of the shares of the Common Stock at the time subject to
the option over the Option Price payable for such shares) at the time of the
Corporate Transaction. The determination of option comparability under clause
(i) or (ii) shall be made by the Plan Administrator, and its determination shall
be final, binding and conclusive.
B. This option, to the extent not previously exercised,
shall terminate upon the consummation of the Corporate
5.
26
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof.
C. Upon the occurrence of one or more of the following
transactions (a "Change in Control"):
(i) the acquisition by a person or group of
related persons, other than the Company or any person controlling, controlled by
or under common control with the Company, of beneficial ownership (as determined
pursuant to the provisions of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of securities of the Company representing thirty percent (30%)
or more of the combined voting power of the Company's then outstanding
securities pursuant to a transaction or series of related transactions which the
Board does not approve; or
(ii) the first date within any period of thirty-
six (36) consecutive months or less on which there is effected any change in the
composition of the Board such that the majority of the Board (determined by
rounding up to the next whole number) ceases to be comprised of individuals who
either (I) have been members of the Board continuously since the beginning of
such period or (II) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (I) who were still in office at the time such election or nomination was
approved by the Board;
the exercisability of this option (if outstanding at the time) shall be
automatically accelerated so that such option shall become exercisable,
immediately prior to the consummation or the Change in Control, for all of the
Optioned Shares and may be exercised for all or any portion of such shares at
any time thereafter until the expiration or sooner termination of the option
term.
D. This Agreement shall not in any way affect the right
of the Company to adjust, reclassify, reorganize or otherwise make changes in
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. The holder of this
option shall not have any of the rights of a shareholder with respect to the
Optioned Shares until such individual shall have exercised the option, paid the
Option Price for the purchased shares and satisfied all other applicable
conditions precedent to the issuance of the certificates for such shares.
6.
27
9. Manner of Exercising Option.
A. In order to exercise this option for one or more
Optioned Shares for which this option is at the time exercisable, Optionee (or
in the case of exercise after Optionee's death, the Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Execute and deliver to the Secretary of the
Company a written notice of exercise (the "Exercise Notice") in substantially
the form of Exhibit I attached hereto.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following alternative forms:
(1) full payment in cash or check made
payable to the Company's order; or
(2) full payment in shares of Common
Stock held by the Optionee for the requisite period necessary to avoid a charge
to the Company's reported earnings and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(3) full payment in a combination of
shares of Common Stock held for the requisite period necessary to avoid a charge
to the Company's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check.
(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option, if other than
Optionee, have the right to exercise this option.
B. The Option Price may also be paid through a sale and
remittance procedure. Pursuant to such procedure, Optionee (I) shall provide
irrevocable written instructions to a designated brokerage firm to effect the
immediate sale of the purchased Optioned Shares and remit to the Company, out of
the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate Option Price payable for such purchased shares plus all applicable
federal and state income and employment taxes required to be withheld by the
Company by reason of such purchase and (II) shall concurrently provide written
directives to the Company to deliver the certificates for the purchased Optioned
Shares directly to such brokerage firm in order to complete the sale
transaction.
C. For purposes of this Agreement, the Exercise Date
shall be the first date on which the Exercise Notice shall have been delivered
to the Company. Except to the extent the sale and
7.
28
remittance procedure of Paragraph 9B is utilized, payment of the Option Price
shall immediately become due and shall accompany the Exercise Notice.
D. As soon as practical after the Exercise Date, the
Company shall mail or deliver to Optionee (or to the other person or persons
exercising this option) a certificate or certificates representing the purchased
shares.
E. In no event may this option be exercised for any
fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of
Optioned Shares upon such exercise shall be subject to compliance by the Company
and the Optionee with all applicable requirements of law relating thereto and
with all applicable regulations of any stock exchange on which shares of the
Company's Common Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such representations in
writing as may be requested by the Company in order for it to comply with the
applicable requirements of federal and state securities laws.
11. Successors and Assigns. Except to the extent
otherwise provided in Paragraph 3 or 7A, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, legal representatives and assigns of Optionee and the successors and
assigns of the Company.
12. Liability of Company.
A. If the Optioned Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without shareholder approval be issued under the Plan, then this option shall be
void with respect to such excess shares unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained.
B. The inability of the Company to obtain approval from
any regulatory body having authority deemed by the Company to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained.
8.
29
The Company, however, shall use its best efforts to obtain all such approvals.
13. No Employment or Service Contract. Nothing in this
Agreement or in the Plan shall confer upon the Optionee any right to continue in
the Service of the Company (or any Parent or Subsidiary employing or retaining
Optionee) for any period of time or otherwise interfere with or restrict in any
way the rights of the Company (or any Parent or Subsidiary employing or
retaining Optionee) or the Optionee, which rights are hereby expressly reserved
by each, to terminate the Optionee's Service at any time for any reason
whatsoever, with or without cause.
14. Notices. Any notice required to be given or delivered
to the Company under the terms of this Agreement shall be in writing and
addressed to the Company in care of the Corporate Secretary at its principal
corporate offices. Any notice required to be given or delivered to Optionee
shall be in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Grant Notice. All notices shall be deemed to
have been given or delivered upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.
15. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
16. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that state's conflict-of-laws rules.
17. Additional Terms Applicable to an Incentive Stock
Option. In the event this option is an incentive stock option as specified in
the Grant Notice, the following terms and conditions shall also apply to the
grant:
A. This option shall cease to qualify for favorable tax
treatment as an incentive stock option under the federal tax laws if (and to the
extent) this option is exercised for one or more Optioned Shares: (i) more than
three (3) months after the date the Optionee ceases Employee status for any
reason other than death or permanent disability or (ii) more than one (1) year
after the date the Optionee ceases Employee status by reason of permanent
disability.
9.
30
For purposes of this Paragraph 17, Optionee shall be deeded to
be permanently disabled if Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or to be of continuous
duration of twelve (12) consecutive months or more, unable to perform his/her
usual duties for the Company or Subsidiary retaining his/her services.
B. Except in the event of a Corporate Transaction or
Change in Control under Paragraph 7, this option shall not become exercisable in
any calendar year during which it is outstanding if (and to the extent) the
aggregate fair market value (determined at the Grant Date) of the Common Stock
for which this option would otherwise first become exercisable in such calendar
year would, when added to the aggregate fair market value (determined as of the
respective date or dates of grant) of the Common Stock for which this option or
one or more other post-1986 incentive stock options granted to the Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Company or any Parent or Subsidiary corporations) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion will first become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 17B would not be
contravened.
C. Should the exercisability of this option be
accelerated upon a Corporate Transaction or Change in Control in accordance with
Paragraph 7, then this option shall qualify for favorable tax treatment as an
incentive stock option under the federal tax laws only to the extent the
aggregate fair market value (determined at the Grant Date) of the Common Stock
for which this option first becomes exercisable in the calendar year in which
the Corporate Transaction or Change in Control occurs does not, when added to
the aggregate fair market value (determined as of the respective date or dates
of grant) of the Common Stock for which this option or one or more other
post-1986 incentive stock options granted to the Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the Company or any
Parent or Subsidiary corporations) first become exercisable during the same
calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
D. To the extent this option should fail to qualify as
an incentive stock option under the federal tax laws, the Optionee will
recognize compensation income in connection with the acquisition of one or more
Optioned Shares hereunder, and the Optionee must make appropriate arrangements
for the satisfaction of all federal, state or local income tax withholding
10.
31
requirements and federal social security employee tax requirements applicable to
such compensation income.
18. Additional Terms Applicable to a Non-Statutory Stock
Option. In the event this option is a non-statutory stock option as specified in
the Grant Notice, Optionee hereby agrees to make appropriate arrangements with
the Company or Parent or Subsidiary employing Optionee for the satisfaction of
any federal, state or local income tax withholding requirements and federal
social security employee tax requirements applicable to the exercise of this
option.
11.
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EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Giga-Tronics Incorporated (the "Company") that
I elect to purchase ____________ shares of Common Stock of the Company (the
"Purchased Shares") pursuant to that certain option (the "Option") granted to me
on __________________________, 19___ to purchase up to ________________shares of
the Company's Common Stock at an option price of $____________ per share (the
"Option Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Company, I shall hereby pay to the Company the Option Price for
the Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
______________________________________ ________________________________________
Date Optionee
Address: ________________________________________
________________________________________
Print name in exact manner it
is to appear on the stock
certificate: ________________________________________
Address to which certificate
is to be sent, if different
from address above: ________________________________________
Social Security Number: ________________________________________
Employee Number: ________________________________________
12.